MASTER 
NEGATIVE 

NO.  95-82406- 7 


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Author: 


Guaranty  Trust  Company 

of  New  York 

Title: 

Export  trade  combinations 


Place: 


[New  Yorl<] 


Date: 


[1918] 


MASTER   NEGATIVE  * 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


140 
G934 


Guaranty  trust  company  of  New  York. 

Export  trade  combinations,  permitted  by  the  Webb 
law,  approved  April  10, 1918.  [New  York,  etc.]  Guaranty 
trust  company  of  New  York  [°1918] 

46  p.    17i'". 

"Text  of  Webb  law" :  p.  40-46. 


l.JLJ.  S. — Comm.    2.  ^Competition,  International.       i.  U.  S.    Laws,  stat- 
utes, etc.    II.  Title,    iii.  Title :  Webb  law. 


18-23370 


Library  of  Congress 
Copyright    A  506896 


HF3029.G7S 


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Export  Trade  Combinations 

Permitted  by  the  Webb  Law, 
Approved  April  10, 1918 


Guaranty  Trast  Company  of  New  York 


FIFTH  AVENUE  OFFICE 
Fifth   Avenue   and    43rd   Street 

I  MADISON   AVENUE  OFFICE 
Madison  Avenue  and  60tli  Street 


140  Broadway 

LONDON  OFFICES 
32  Lombard  St.,  E.  C. 
5  Lr.  Grosvenor  PI.,  S.  W. 


PARIS      OFFICE 
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SCHOOL  OF  BUiilK  . 
COLUMBIA  UNIVER6 

Foreword 


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COPYRIGHT,  1918 
BY   GUARANTY   TRUST   COMPANY   OF   NEW  YORK 


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THIS  booklet  contains  a  statement  of  the 
purpose  of  the  Webb  Law,  (approved 
April  10, 1918),  which  permits  associations  and 
combinations  in  export  trade,  and  suggestions 
as  to  how  different  types  of  combinations 
organized  for  foreign  trade  may  avail  them- 
selves of  its  provisions.  The  full  text  of  the 
law  is  also  given. 

The  reader  will  see  clearly  that  the  essential 
object  of  this  law  is  to  give  American  expor- 
ters a  fair  chance  to  compete  with  the  expor- 
ters of  other  countries  by  enabling  them  to 
reduce  the  expenses  of  marketing,  thus  per- 
mitting the  quotation  of  such  prices  in  for- 
eign countries  as  will  make  American  prod- 
ucts attractive  to  the  consumer.  Unfair 
methods  in  competition  with  rivals  of  other 
countries  or  with  other  American  exporters 
are  alike  forbidden. 

Our  Foreign  Trade  Bureau  will  be  glad  to 
discuss  with  inquirers  the  details  of  these  sug- 
gestions, and  other  applications  of  the  law. 
Executives  of  Trade  Associations,  merchants, 
and  manufacturers  desirous  of  taking  advan- 
tage of  these  new  opportunities  are  invited  to 
consult  us. 

Guaranty  Trust  Company  of  New  York 


Export  Trade  Combinations 

THE  Webb  Law,  permitting  combinations 
in   export  trade,   which   was   approved 
April  10,  1918,  is  an  important  and  necessary 
step  in  enabhng  manufacturers  and  producers 
to  prepare  to  meet  the  post-bellum  demands 
of  foreign  commerce.   Although  this  country 
has  built  up  an  export  trade  of  considerable 
magnitude,  our  manufacturers  and  producers 
have  been  at  a  disadvantage  because  of  the 
uncertainty  of  the  application  of  the  Sherman 
and  the  Clayton  Anti-Trust  Acts  to  combina- 
tions and  associations  of  exporters.   Coopera- 
tion is   necessary   in   order  that   they  may 
participate  in  foreign  trade  on  an  even  basis 
with  foreign  competitors,  and  at  the  same 
time,  not  be  compelled  to  compete  with  each 
other.     The  Act  as  passed,  would  seem  to 
allow  to  exporters  the  freedom  of  contract 
necessary  for  their  protection  and  necessary 
to  meet  the  competition  of  foreign  combina- 
tions and  agencies,  at  the  same  time  placing 
ample  check  on  unfair  methods  and  abuse. 

[5] 


To  Compete  on  Equal  Terms 

The  remarkable  increase  in  the  value  of 
American  exports  during  the  last  four  years 
has  been  due  to  abnormal  conditions  occa- 
sioned by  the  war.  Such  conditions,  of  course, 
cannot  be  expected  to  continue.  When  trade 
again  assumes  its  normal  trend,  the  extraor- 
dinary demands  of  foreign  countries  for  the 
products  of  this  country  will  naturally  be 
lessened.  Foreign  countries  which  have  been 
engaged  in  the  war,  will  again  meet  our  manu- 
facturers and  producers  in  competition  in  the 
world's  markets.  To  meet  that  competition, 
it  is  essential  that  American  exporters  be 
placed  on  equal  terms  with  their  competitors. 
The  Webb  Law  gives  them  privileges  of  asso- 
ciation which  they  have  never  before  enjoyed, 
because  of  the  uncertainty  of  the  prohibitions 
of  the  law. 


Combinations  in  other  Countries 

The  purpose  and  intent  of  the  law  is  to  give 
to  American  exporters  the  privileges  and  ad- 
vantages of  dealing  through  combinations, 
associations,  or  agencies  similar  to  those  which 

[61 


have  so  long  existed  in  foreign  countries. 
Nearly  every  country  with  which  we  compete 
permits  and  encourages  manufacturers  and 
producers  to  organize  combinations  to  ad- 
vance its  foreign  trade.  In  Great  Britain 
manufacturers  and  producers  are  permitted 
to  consolidate  through  the  medium  of  an 
export  company.  In  fact,  most  of  the  leading 
products  are  exported  under  lawfully  author- 
ized agreements,  syndicates,  and  combina- 
tions. Similar  cooperation  is  authorized  or 
permitted  also  in  France,  Italy,  Switzerland, 
Holland,  Japan,  and  other  countries,  and  the 
trade  covers  practically  every  article  or  prod- 
uct which  we  manufacture  or  produce  for 
export. 


Types  of  American  Organizations 

Mr.  Gilbert  H.  Montague,  of  the  New  York 
Bar,  who  was  counsel  to  the  special  committee 
of  the  American  Manufacturers  Export  Asso- 
ciation in  support  of  the  Webb-Pomerene  Bill, 
has  made  a  study  of  the  several  types  of 
selling  organizations  which  may  be  formed 
under  the  Webb  Law  and  the  manner  in  which 

[7] 


existing  types  may  be  affected  by  the  law 
under  various  circumstances.  Among  these 
types  are  the  branch  house,  the  export  house, 
the  local  dealer,  the  traveller,  and  the  joint 
selling  organization.  A  summary  of  Mr. 
Montague's  findings  is  presented  herewith. 

The  Branch  House 

A    familiar   type   of   selling   organization 
which  has  been  developed  in  export  trade  is 
the  branch  house,  which  is  an  export  branch, 
or  export  department,  or  export  subsidiary 
company,  of  a  single  parent  concern,  which 
this  parent  concern   wholly  controls.     The 
branch  house  has  many  advantages  which  no 
other  type  of  selling  organization  possesses. 
All  these  advantages  may  be  retained,  with- 
out that  loss  of  individuality  and  independ- 
ence which  a  single  joint  selling  organization 
might  involve,  and  to  these  advantages  may 
be  added  the  legal  power  to  agree  with  any 
competing  concern  regarding  allotment  of  ex- 
port orders,  or  prices  to  foreign  buyers,  or 
terms  of  export  sales,  or  credits  to  foreign 
customers,  or  grades  of  export  products,  allo- 

[8] 


COLUMBIA  UNIVERSIT 


cation  of  foreign  markets,  or  pooling  of  foreign 
business,  or  apportionment  of  output  for  ex- 
port, or  division  of  sales  territory  abroad,  or 
the  like,  if  the  branch  house  and  the  com- 
peting concern  qualify  themselves,  either  as 
an  Export  Association,  or  as  separate  Export 
Associations,  under  the  terms  of  the  Webb 
Law. 

To  Retain  Individuality 

Another  method  by  which  the  branch 
house,  and  any  competing  concern  with  which 
it  may  desire  to  make  an  arrangement  of  the 
character  above  described,  can  qualify  as  Ex- 
port Associations  without  merging  their  in- 
dividuality and  independence  in  a  single  joint 
selling  organization,  requires  that  each  should 
amend  its  articles  of  incorporation,  and  re- 
strict its  business  operations,  so  that  they 
should  include  "solely  trade  or  commerce  in 
goods,  wares,  or  merchandise  exported,  or  in 
the  course  of  being  exported,  from  the  United 
States  or  any  Territory  thereof  to  any  foreign 
nation,"  and  not  include  "the  production, 
manufacture,  or  selling  for  consumption  or 
for  resale,  within  the  United  States  or  any 

[91 


Territory  thereof,  of  such  goods,  wares,  or 
merchandise,  or  any  act  in  the  course  of  such 
production,  manufacture,  or  seUing  for  con- 
sumption or  for  resale/' 

Separate  Incorporation  Desirable 

For  the  branch  house  and  any  competing 
concern  that  are  not  incorporated,  but  are 
simply  export  branches  or  export  departments 
of  parent  organizations,  this  requires,  as  a 
matter  of  practical  convenience,  that  these 
respective  export  branches,  or  export  depart- 
ments, be  separately  incorporated  as  Export 
Associations.  They  would  then  be  qualified 
to  enter  into  the  arrangements  for  promoting 
foreign  trade  which  are  authorized  under  the 
new  law. 

Advantages  of  the  Export  House 

The  export  house,  by  which  is  meant  a 
self-organized,  independent  organization  sell- 
ing in  foreign  markets  goods  that  it  has 
bought  outright,  or  that  it  has  been  com- 
missioned by  foreign  customers  to  buy  for 

[10] 


[^ 


their  account,  or  that  it  has  undertaken  to 
sell,  or  the  sales  of  which  it  has  undertaken 
to  finance,  or  the  deliveries  of  which  it  has 
undertaken  to  effect,  on  commission,  or  on 
some  other  basis,  for  different  concerns  which 
have  contracted  with  it  for  this  service,  has 
many  advantages  that  assure  its  permanence 
as  a  type  of  selling  organization,  and  the 
Webb-Pomerene  Law  has  greatly  expanded 
its  field  of  opportunity. 

Among  concerns  that  hitherto  have  stayed 
out  of  export  trade,  because  of  lack  of  re- 
sources, fear  of  competition,  and  inability  to 
combine,  the  export  house,  with  its  knowledge 
of  foreign  markets,  has  unrivaled  facilities  for 
developing  a  satisfactory  volume  of  export 
business  upon  a  basis  satisfactory  to  itself  and 
to  concerns  at  home  whose  accounts  it  can 
bring  together  and  handle  through  its  own 
organization. 

Combination  of  Competing  Concerns 

SoKcitation  of  non-competing  accounts  has 
hitherto  been  the  custom  of  the  export  house. 
With  the  passage  of  the  Webb-Pomerene  Law, 

[11] 


however,  the  combination  of  competing  con- 
cerns, and  the  organization  of  entire  indus- 
tries, into  big,  single,  export  accounts  has  be- 
come a  very  attractive  possibihty.   To  groups 
of  competing  concerns,  combined  into  Export 
Associations  of  one  type  or  another,  the  ex- 
port house  can  offer  selh'ng,  financing,  and 
shipping  facilities  in  many  foreign  markets, 
which  such  groups  might  otherwise  never  at- 
tam.   Even  though  such  groups  contract  to 
ally  themselves  for  only  a  few  years  with  the 
export  house,  the  latter,  during  the  hfe  of  the 
arrangement,  might  have  the  entire  export 
business  of  substantial  fractions  of  whole  in- 
dustries, which  might  yield  not  only  satis- 
factory present  profits,  but  also  possibihties 
of  future  business  well  worth  having.   In  the 
promotion  of  various  types  of  Export  Asso- 
ciations, therefore,  the  aggressive  export  mer- 
chant house  may  come  to  find  one  of  its  most 
profitable  fields  of  activity. 

The  Jobber  and  the  Traveller 

The  local  dealer,  by  which  is  meant  a  job- 
bing or  retailing  concern,  located  in  a  particu- 

[12] 


lar  foreign  market,  and  selling  goods  that  it 
has  bought  outright,  or  that  it  has  undertaken 
to  sell,  on  commission,  or  consignment,  or 
some  other  basis,  for  a  concern  which  has 
contracted  with  it  for  this  selling  service,  and 
the  traveller,  by  whom  is  meant  one  employed 
by  a  single  concern  to  sell  its  goods  in  particu- 
lar foreign  markets,  and  whom  this  concern 
wholly  controls,  are  types  of  selling  organiza- 
tions that  stand  less,  perhaps,  than  any  other 
in  need  of  agreements  between  competing 
concerns.  Concerns  employing  these  types  of 
selling  organization  may,  however,  obtain 
legal  power  to  make  such  agreements  with 
competing  concerns  if  they,  and  the  compet- 
ing concern  with  which  they  desire  to  enter 
into  an  agreement,  each  qualify  themselves 
either  as  an  Export  Association,  or  as  separate 
Export  Associations. 

Joint  Selling  Organizations 

Since  the  passage  of  the  Webb  Law  much 
attention  has  been  given  to  the  matter  of  its 
application  to  and  the  benefits  to  be  derived 
from  it  by  the  joint  selling  organization,  by 

[13] 


which  is  meant  an  organization  that  may 
have  a  greater  or  less  degree  of  autonomy, 
but  whose  distinguishing  characteristic  is  that 
it  pools,  in  a  single  organization,  the  export 
activities  of  a  number  of  previously  compet- 
ing parent  concerns.   Already  in  various  lines 
of  industry  groups  of  competing  concerns  are 
giving  thought  to  various  plans  for  single 
joint  selling  organizations.    How  to  obtain 
the  necessary  centralization  with  the  least 
loss  of  individuality  and  independence  on  the 
part  of  the  parent  concerns,  is  a  problem 
which  each  industry  and  each  group  must 
solve  in  its  own  way.   In  his  analysis  Mr. 
Montague  gives  a  number  of  examples  of 
what  has  been  done  by  various  concerns  to 
meet  the  peculiar  conditions  which  confronted 
them.   He  says : 

An  Industrial  Example 

''  Such  export  trade  as  there  was,  in  a  certain 
American  industry,  had  been  confined  to 
several  large  concerns  represented  abroad  by 
branch  houses  or  export  houses. 

"  Upon  the  return  of  normal  conditions,  it 
seemed  certain  that  general  over-production 

[14] 


SCHOOL  OF  BUSINESS 

CCA  \mp\!^  UNiv::R3iiY 

would  exist  tnfbugn  the  industry  at  home, 
while  abroad  an  active  and  constant  demand 
would,  in  all  probability,  be  resumed  in  vari- 
ous markets  at  prices  and  for  grades  on  which 
many  concerns  in  the  industry  would  then  be 
glad  to  quote.  The  handful  of  concerns  al- 
ready selling  abroad  were  as  yet  unwilling  to 
alter  their  existing  relations  with  branch 
houses  and  export  houses.  They  would,  how- 
ever, make  with  any  joint  selling  organiza- 
tion comprising  the  rest  of  the  industry,  satis- 
factory arrangements  regarding  prices  to  for- 
eign buyers,  or  terms  of  export  sales,  or  credits 
to  foreign  customers,  or  grades  of  export 
products,  or  other  subjects  of  common  inter- 
est. A  man  experienced  in  the  industry,  and 
acquainted  with  conditions  in  foreign 
markets,  could  be  engaged  for  a  reasonable 
salary  and  a  fair  bonus  arrangement  as  gen- 
eral manager  of  a  joint  selling  organization. 
With  him,  and  with  one  or  two  banks  familiar 
with  conditions  in  foreign  markets,  plans  had 
been  worked  out  for  financing  the  sales 
abroad,  and  for  financing  the  purchases  at 
home,  and  for  a  schedule  of  credits  for  sales 

[15] 


abroad  and  for  purchases  at  home,  and  for 
opening  sales  branches  beginning  sales  pro- 
motion in  several  selected  foreign  markets. 
From  this,  and  from  an  estimate  of  prospec- 
tive operating  expenses,  a  budget  had  been 
worked  out  of  the  probable  financial  require- 
ments of  a  joint  selling  organization.  With 
the  banking  accommodation  that  seemed 
reasonably  assured,  and  with  an  ample  mar- 
gin for  safety,  an  initial  investment  of  $200,- 
000  seemed  suflScient  to  start  the  organiza- 
tion. 

Organization  of  the  Corporation 

"A  corporation  was  finally  determined  upon 
to  be  organized  under  the  laws  of  one  of  the 
eastern  States,  with  its  purposes  carefully 
limited  to  those  permitted  by  the  Webb- 
Pomerene  Law,  and  with  capital  stock  con- 
sisting of  5,000  preferred  shares  and  5,000 
common  shares,  the  preferred  shares  to  be 
eight  per  centum  per  annum,  cumulative,  par 
value  $100  each,  to  be  all  issued  at  organiza- 
tion, on  which  $40  per  share  was  to  be  paid 
up  and  $60  per  share  was  to  be  subject  to  call, 

[16] 


the  common  shares  to  be  without  nominal  or 
par  value,  to  be  issued  only  as  bonus,  share 
for  share,  with  subscriptions  for  preferred 
shares,  and  only  to  concerns  actually  par- 
ticipating in  the  joint  selling  arrangement. 
No  participating  concern  was  to  have  more 
than  one  vote,  and  each  was  to  be  represented 
upon  the  Board  of  Directors,  whose  powers, 
when  not  in  session,  were  to  be  vested  in  a 
small  Executive  Committee. 

The  Agency  Agreement 

"  Each  participating  concern  was  to  execute 
an  agreement  with  the  corporation,  consti- 
tuting the  latter  exclusive  agent  of  the  former, 
for  the  sale  of  the  former's  entire  export  product 
during  the  life  of  the  agreement.  This  export 
product  was  to  amount  to  a  specified  per- 
centage of  the  participating  concern's  output, 
consisting  of  specified  grades  and  quantities. 
The  corporation  was  to  fix  the  prices  at  which 
it  should  sell  the  export  product,  and  bill  and 
collect  therefor  in  its  own  name.  The  par- 
ticipating concern  was  to  standardize,  label, 
mark,  pack,  and  ship  its  export  product  as  di- 

[17] 


reeled  by  the  corporation,  and  was  to  protect 
the  latter  in  respect  of  all  claims  by  pur- 
chasers. The  participating  concern  was  to 
bear  all  freight  and  other  charges  to  the  sea- 
board, but  the  corporation  was  to  bear  all 
freight  and  other  charges  beyond  the  sea- 
board, and  all  selling  expenses  of  the  corpora- 
tion. For  export  products  which  the  partici- 
pating concern  furnished  the  corporation,  the 
participating  concern  was  to  be  credited  upon 
the  basis  of  prices  arrived  at  by  one  of  a 
variety  of  ways.  Thus,  the  corporation  might 
take  from  each  participating  concern  an  op- 
tion for  a  specified  period,  upon  specified 
grades  and  quantities  at  specified  prices. 
Again,  whenever  the  corporation  desired  to 
quote  upon  a  prospective  order,  it  might 
communicate  with  each  participating  con- 
cern, and  fill  the  order  from  whichever  par- 
ticipating concern  named  the  lowest  price. 
As  compensation  for  its  services,  the  corpora- 
tion was  to  receive  and  retain  the  excess  of 
the  export  price  at  which  it  should  sell  such 
product  over  and  above  the  price  at  which  it 
purchased  from  the  participating  concern. 
The  corporation  was  to  settle  with  the  par- 

[18] 


ticipating  concern  for  each  shipment  within 
thirty  days,  less  two  per  cent,  discount  in  ten 
days.  Out  of  the  aggregate  profits  realized 
on  the  operations  of  the  corporation,  the  cor- 
poration was  to  retain  an  amount  sufficient 
to  pay  cumulative  dividends  at  the  rate  of 
eight  per  centum  per  annum  on  its  preferred 
shares,  and  also  such  amount  as  the  Board  of 
Directors  should  deem  proper  for  reserves. 
Out  of  any  balance  remaining,  the  corpora- 
tion was  to  grant  to  each  participating  con- 
cern then  in  good  standing  a  rebate  in  the 
proportion  which  the  amount  of  export  prod- 
uct guaranteed  by  each  participating  concern 
bore  to  the  aggregate  of  similar  export  prod- 
ucts guaranteed  by  all  the  participating  con- 
cerns. 

Another  Example  of  Cooperation 

"Most  of  the  concerns,  in  another  American 
industry,  had  had  some  experience  in  export 
trade,  and  had  suffered  greatly  from  one  an- 
other's competition  in  foreign  markets. 

Upon  the  return  of  normal  conditions,  it 
seemed  certain  that  export  trade  would  be 

[19] 


resumed  with  a  recurrence  of  the  former  un- 
satisfactory conditions,  in  which  foreign 
buyers,  as  formerly,  would  combine  to  pre- 
sent a  united  front  against  each  American 
exporter,  and  by  playing  one  against  another 
would  force  each  to  underbid  the  other  until 
as  so  often  had  occurred  in  the  past,  the  com- 
bined foreign  buyers  would  obtain  the  prod- 
uct below  a  fair  and  reasonable  price.  Most 
of  the  concerns  in  the  industry  had  suffered 
so  much  in  the  past  from  these  conditions, 
and  were  so  fully  convinced  of  the  wastes 
involved  in  their  competition  with  one  an- 
other in  foreign  markets,  that  they  were  ready 
to  cooperate  in  any  reasonable  form  of  single 
joint  selling  organization.  A  man  who  had 
made  his  mark  as  foreign  sales  manager 
for  one  of  the  concerns,  and  whose  integrity 
and  impartiality  were  approved  by  all,  could 
be  engaged  as  general  manager.  Desirable 
locations  in  a  number  of  foreign  markets 
could  be  secured  simply  by  taking  over 
branches  already  maintained  there  by  one  or 
another  of  the  participating  concerns.  There 
was  abundant  past  experience  from  which  to 

[20] 


plan  the  oflSce  management  and  sales  organ- 
ization, to  work  out  the  details  of  selling, 
credits,  financing,  shipping,  and  traffic,  and 
to  draw  up  a  budget  of  probable  financial  re- 
quirements for  a  joint  selling  organization. 

Form  of  Incorporation 

**A  corporation  of  $150,000  capitalization, 
entirely  of  paid-up  common  stock,  was  finally 
determined  upon,  to  be  organized  under  the 
laws  of  one  of  the  western  States,  with  its 
purposes  carefully  limited  to  those  permitted 
by  the  Webb-Pomerene  Law.  Only  concerns 
which  should  agree  to  sell  their  entire  export 
output  through  the  corporation  were  eligible 
to  become  stockholders;  and  no  concern  was 
to  be  entitled  to  more  than  one  vote,  regard- 
less of  the  number  of  shares  it  might  own;  and 
no  concern,  or  group  of  concerns,  was  ever  to 
obtain  a  majority  interest  or  dominating 
control  of  the  corporation.  To  carry  out 
these  provisions,  every  share  of  stock,  except- 
ing the  qualifying  shares,  was  to  be  endorsed 
in  blank  by  the  stockholder  and  deposited  in 

[21] 


I 


trust  with  stock  trustees.  Upon  this  stock 
the  corporation  was  to  have  a  first  lien  as 
security  for  the  faithful  observance  and  per- 
formance by  the  stockholders  of  the  corporate 
by-laws  and  resolutions  and  of  any  agree- 
ments entered  into  or  obligations  incurred  by 
the  stockholder  with  respect  to  the  corpora- 
tion. In  event  of  the  stockholder's  default 
in  this  regard,  the  Board  of  Directors  could 
tender  to  the  stockholder  the  book  value,  not 
exceeding  the  par  value,  of  his  stock,  less  any 
indebtedness  owing  by  the  stockholder  to  the 
corporation,  and  could  then  cancel  his  stock, 
and  reissue  it  to  the  stock  trustees,  who  in 
turn  might  sell  it  to  concerns  eligible  to  be- 
come stockholders.  According  to  the  by-laws, 
specified  geographical  groups  of  stockholders 
were  always  to  be  entitled  to  specified  num- 
bers of  directors  in  the  Board  of  Directors  and 
in  the  Executive  Committee.  Dividends  were 
to  be  limited  to  seven  per  centum  per  annum, 
and  surplus  earnings  were  to  be  retained  for 
reserves,  or  expended  in  sales  promotion  in 
export  trade,  according  as  the  Board  of  Di- 
rectors might  determine. 

[22] 


Agreements  with  Participating  Concerns 

"Each  participating  concern  was  to  execute 
an  agreement  with  the  corporation,  consti- 
tuting the  latter  the  exclusive  agent  of  the 
former,  for  the  sale  of  the  former's  entire  ex- 
port product  during  the  life  of  the  agreement. 
This  export  product  was  to  consist  of  a  speci- 
fied quota  determined  from  time  to  time  by 
the  Board  of  Directors  of  the  corporation. 
The  corporation  was  to  sell  the  export  prod- 
uct at  such  prices  as  the  corporation  should 
be  able  to  obtain,  and  was  to  allot  its  orders 
fairly  and  impartially  among  the  participat- 
ing concerns,  as  nearly  as  possible  in  accord- 
ance with  quotas  determined  from  time  to 
time  by  the  Board  of  Directors  of  the  corpora- 
tion. Each  participating  concern  was  to 
accept  and  execute  such  orders  as  the  cor- 
poration should  assign  to  it.  The  corporation 
was  to  guarantee  all  accounts  that  it  should 
sell,  and  was  to  settle  with  each  participating 
concern  for  each  shipment  within  thirty  days, 
and  was  to  retain  for  its  services  a  commission 
of  two  and  one-haK  per  centum.  The  agree- 
ment between  the  corporation  and  the  par- 

123] 


♦ 


ticipating  concern  was  to  provide  for  no 
rebate  upon  this  commission,  and  the  only 
refund  of  any  kind  to  which  the  participating 
concern  was  to  be  entitled  was  in  the  form  of 
dividends  upon  such  stock  as  the  participat- 
ing concern  might  own  in  the  corporation. 

Another  Typical  Case 

"Most  of  the  concerns,  in  another  American 
industry,  had  for  years  been  selling  a  substan- 
tial part  of  their  output  in  export  trade,  and 
had  suffered  greatly,  in  the  manner  above  de- 
scribed, from  combinations  of  foreign  buyers. 

"Much  as  the  industry  had  suffered  from 
this  cause,  however,  certain  concerns,  whose 
cooperation  was  deemed  to  be  essential, 
were  known  to  be  adverse  to  become  full 
members  of  any  single  joint  selling  organiza- 
tion. Every  concern,  on  the  other  hand,  had 
for  years  been  accustomed  to  sell  its  export 
product  through  one  or  another  agent,  whom 
it  had  paid,  on  a  commission  basis,  for  selling, 
financing,  and  effecting  deliveries  abroad. 

"A  well  qualified  general  manager,  and  suit- 
able  foreign    representatives,    were   readily 

[24] 


available  for  a  joint  selling  organization.  The 
financial  requirements  of  such  an  organiza- 
tion, also,  were  ascertainable  with  reasonable 
accuracy,  and  were  easily  within  the  ability 
of  the  industry  to  provide.  A  corporation  was 
accordingly  determined  upon,  to  be  organized 
under  the  laws  of  one  of  the  eastern  States 
with  its  purposes  carefully  limited  to  those 
permitted  by  the  Webb-Pomerene  Law,  and 
with  a  cash  capital  of  $100,000  to  be  obtained 
by  the  issue  of  partly  paid  common  stock,  the 
balance  to  be  subject  to  call  in  event  of  any 
unexpected  increase  in  the  financial  require- 
ments of  the  corporation.  Only  concerns  that 
should  agree  to  sell  their  entire  export  prod- 
uct through  the  corporation  over  a  specified 
number  of  years  were  to  be  eligible  to  become 
stockholders. 

Method  of  Sales  Distribution 

"Each  participating  concern  was  to  execute 
an  agreement  with  the  corporation,  constitut- 
ing the  latter  the  exclusive  agent  of  the 
former,  for  the  sale  of  the  former's  entire  ex- 
port product  during  the  life  of  the  agreement. 

[25] 


This  export  product  was  to  amount  to  a  speci- 
fied proportion  of  the  participating  concern's 
output.   The  corporation  was  to  sell  the  ex- 
port product  at  the  best  prices  that  it  could 
obtain,  and  was  to  allot  orders  among  the 
participating  concerns  as  nearly  as  possible 
in  proportion  to  the  amount  of  export  prod- 
uct which  each  had  guaranteed  to  the  cor- 
poration. The  participating  concern  was  to 
standardize,  label,  mark,  pack,  and  ship  its 
export  product  as  directed  by  the  corporation, 
and  was  to  protect  the  latter  in  respect  of  all 
claims  by  purchasers.   The  participating  con- 
cern was  to  bear  all  freight  and  other  charges 
to  the  seaboard,  but  the  corporation  was  to 
bear  all  freight  and  other  charges  beyond  the 
seaboard,  and  all  expenses  of  the  corporation. 
For  such  products  as  the  participating  con- 
cern furnished  the  corporation,  the  partici- 
pating concern  was  to  be  credited  upon  the 
basis  of  prices  specified  in  a  schedule  attached 
to  the  agreement.   As  compensation  for  its 
services,  the  corporation  was  to  receive  u 
commission  of  three  and  one-half  per  cen- 
tum, and  to  retain  the  excess  of  the  export 

[26] 


price  at  which  it  should  sell  such  product 
over  and  above  the  price  at  which  it  pur- 
chased from  the  participating  concern.  The 
corporation  was  to  settle  with  the  participat- 
ing concern  for  each  shipment  within  ten  days 
after  delivery  of  shipment  at  the  seaboard, 
less  two  per  cent,  discount  for  cash  against 
bills  of  lading  to  the  seaboard.  Out  of  the 
aggregate  commissions  received  by  the  cor- 
poration, the  corporation  was  to  retain  an 
amount  suflScient  to  pay  dividends  at  the 
rate  of  seven  per  centum  per  annum  on  its 
capital  stock,  and  also  such  amount  as  the 
Board  of  Directors  should  deem  proper  for 
reserves.  Out  of  any  balance  remaining,  the 
corporation  was  to  grant  to  each  participating 
concern,  then  in  good  standing,  a  rebate  in 
the  proportion  which  the  amount  of  export 
product  guaranteed  by  each  participating 
concern  bore  to  the  aggregate  of  similar  export 
products  guaranteed  by  all  the  participating 
concerns. 

''Traveling  in  Double  Harness^' 

"This  agreement  was  to  be  the  basis  upon 
which  the  corporation  would  sell  the  export 

[27] 


product  of  concerns  participating  as  stock- 
holders in  the  joint  selling  organization.  But 
some  concerns,  as  already  has  been  stated, 
were  known  to  be  adverse  to  becoming  full 
members  of  any  single  joint  selling  organiza-  Ij 
tion.   Each  of  these  concerns,  however,  had  | 
for  years  been  accustomed  to  sell  its  export 
product  through  one  or  another  agent,  whom 
it  had  paid  on  a  commission  basis,  for  selling, 
financing,   and   effecting   deliveries   abroad. 
Each  of  these  concerns,  accordingly,  was  to 
be  invited  to  make  an  agency  agreement  with  j 
the  corporation,   similar  in   all   substantial 
respects  to  the  agency  agreements  which  it 
had   been   accustomed   to    make    with    its 
former  agents.   These  agreements   were  to 
contain  provisions  for  their  termination,  by 
either  party,  upon  fairly  short  notice,  so  that 
each  party  would  have  a  prompt  way  of 
escape  if  these  agreements  should  prove  un- 
satisfactory. During  the  life  of  these  agree- 
ments, however,  the  concerns  entering  into 
them  could  try  out  the  experiment  of  travel- 
ling in  double  harness  with  the  rest  of  the 
industry,  and  if  they  found  the  experiment 

[28] 


satisfactory,  they  could  then  all  combine, 
upon  a  more  enduring  basis,  as  stockholders 
and  full  participating  members,  in  a  joint 
selling  organization. 

The  Joint  Type  of  Organization 

"In  the  examples  of  joint  selling  organiza- 
tions above  described,  it  was  the  organization 
itself  that  undertook  the  work  of  selling 
abroad.  This,  however,  is  not  an  essential 
characteristic  of  the  joint  selling  type  of  organi- 
zation. A  joint  selling  organization,  having 
contracted  with  its  members  for  their  entire 
export  product,  may  find  it  the  part  of  wisdom 
to  contract  then  with  an  export  house  for  the 
disposal  of  its  export  product,  on  commission, 
or  on  some  other  satisfactory  basis.  The 
export  house,  as  shown  above,  may  undertake 
for  the  joint  selling  organization  the  actual 
work  of  selling,  financing,  and  effecting  de- 
liveries of  the  export  product  controlled  by 
the  joint  selling  organization.  For  the  export 
house,  this  arrangement  might  be  attractive 
because  it  would  result  in  the  consolidation 
of  a  number  of  separate  small,  indiflferent 

[29] 


I 


i 


accounts  into  a  single,  substantial,  desirable 
account.  For  the  participating  concerns  com- 
bining in  the  joint  selling  organization,  the 
arrangement  might  be  attractive,  because  it 
would  promise  profit  with  the  minimum  of 
risk  and  overhead  expense,  and  would  assure 
better  terms,  from  the  export  house  than  each 
of  the  participating  concerns  could  possibly 
expect.  Again,  a  joint  selling  organization, 
desiring  itself  to  undertake  the  work  of  selling 
abroad,  but  not  on  so  ambitious  a  scale  as  in 
the  examples  above  described,  might  decide 
to  sell  through  local  dealers,  or  through  a 
traveller,  in  the  mode  characteristic  of  those 
types  of  selling  organization.  Thus  it  might 
save  all  the  wastes  of  competition,  and  all  the 
economies  of  combination,  which  savings  and 
economies  the  joint  type  of  organization 
makes  possible,  and  at  the  same  time  might 
obtain  all  the  advantages  which  other  types 
of  selling  organization  afford  in  many  foreign 
markets. 

Wide  Choice  of  Methods 

"A  joint  selling  organization,  having"  con- 
tracted for  the  entire  export  product  of  its 

[30] 


participating  concerns,  is  therefore  unfettered 
in  its  choice  of  methods  for  selling  in  export 
trade,  and  is  in  position  to  market  abroad 
through  branch  houses,  or  export  houses,  or 
local  dealers,  or  travellers,  through  any  type 
of  selling  organization  whatsoever. 

Combination  of  Joint  Selling  Organizations 

"Nor  should  it  be  forgotten  that  joint  selling 
organizations,  like  all  other  types  of  Export 
Associations,  may  combine  with  one  another 
into  larger,  and  more  comprehensive  joint 
selling  organizations,  whenever  greater  econ- 
omies, or  more  eflSciency,  or  any  other  ad- 
vantages, to  themselves  and  to  the  concern 
participating  in  them,  appear  to  lie  in  that 
direction.  And  should  combination  of  this 
character  appear  desirable,  but  obstacles  be 
presented  in  the  loss  of  individuality  and 

independence  which  a  larger  joint  selling 
organization  might  involve,  it  should  not  be 
forgotten  that  single  joint  selling  organiza- 
tions, instead  of  combining  into  a  larger  sell- 
ing organization,  may  simply  enter  into  agree- 
ments with  one  another  regarding  allotment 

[31] 


'I  I 

I 


Ml 


of  export  orders,  or  prices  to  foreign  buyers, 
or  terms  of  export  sales,  or  credits  to  foreign 
customers,  or  grades  of  export  products,  or 
allocation  of  foreign  markets,  or  pooling  of 
foreign  business,  or  apportionment  of  output 
for    export    or    division    of    sales    territory 
abroad,  or  common  selling  agencies  for  export, 
or  joint  representation  in  export  trade,  or  the 
like.   Nor,  finally,  should  it  be  forgotten  that 
the  humblest  American  exporter,  whether  he 
sells  through  an  export  house,  or  local  dealers, 
or  a  traveller,  or  only  by  mail  order,  may 
nevertheless  deal  at  arm's  length  with  the 
largest  joint  selling  organization,  or  may  come 
to  terms  with  it,  if  the  terms  are  satisfactory 
to  both  parties,  upon  any  agreement  of  the 
character  above  described,  or,  if  he  prefer, 
may  go  his  own  gait  in  export  trade,  with 
absolute  assurance  that  the  Federal  Trade 
Commission  will  protect  him  against  any  act 
of  his  big  competitor  that  constitutes  unfair 
competition    or   restraint   upon    his    export 
trade/' 


[32] 


Provisions  of  the  Law 


Export  Trade  Defined 

The  term  "export  trade, ''as  used  in  the  law, 
means  solely  trade  or  commerce  in  goods, 
wares,  or  merchandise  exported  or  in  the 
course  of  being  exported  from  the  United 
States  or  any  territory  thereof,  to  any  foreign 
nation.  The  words  "export  trade"  are  deemed 
to  exclude  the  production,  manufacture,  or  sell- 
ing for  consumption  or  for  resale,  within  the 
United  States  or  any  territory  thereof,  of 
goods,  wares,  or  merchandise,  or  any  act  in 
the  course  of  such  production,  manufacture, 
or  selling  for  consumption  or  resale. 

Trade  Within  the  United  States  Defined 

The  words  "trade  within  the  United  States" 
as  used  in  the  Act,  mean  trade  or  commerce 
among  the  several  states,  or  in  any  territory 
of  the  United  States,  or  in  the  District  of 
Columbia,  or  between  any  such  territory  and 
another,  or  between  any  such  territory  or 

[  33  ] 


i 


I 


territories  and  any  State  or  States  or  the 
District  of  Columbia,  or  between  the  District 
of  Columbia  and  any  State  or  States. 

Association  Defined 

"Association,"  as  used  in  the  law,  means  any/ 
corporation  or  combination,  by  contract  or' 
otherwise,  of  two  or  more  persons,  partner- 
ships or  corporations. 

Restrictions  of  Anti-Trust  Laws  Removed 

Section  2  of  the  Act  exempts  export  com- 
binations or  associations  from  the  operation 
of  the  Sherman  Anti-Trust  Act,  providing 
such  combination  or  association  is  not  in 
restraint  of  trade  within  the  United  States 
and  is  not  in  restraint  of  the  export  trade  of 
any  domestic  competitor.  It  is  expressly  pro- 
vided, however,  that  any  such  association 
may  not,  either  in  the  United  States  or  else- 
where, enter  into  any  agreement,  or  under- 
standing, or  conspiracy,  or  do  any  act  which 
artificially  or  intentionally  enhances  or  de- 
presses prices  within  the  United  States  of 
commodities  of  the  class  exported  by  such 
associations,  or  which  substantially  lessens 

[34] 


competition  within  the  United  States,  or 
otherwise  restrains  trade  therein. 

Section  3  of  the  Act  permits  the  acquisition 
or  ownership  by  any  corporation  of  the  whole 
or  any  part  of  the  stock  or  other  capital  of 
any  corporation  organized  solely  for  the  pur- 
pose of  engaging  in  export  trade  and  actually 
engaged  solely  in  such  export  trade,  notwith- 
standing the  provisions  of  Section  7  of  the 
Clayton  Anti-Trust  Law.  It  is  specifically 
provided,  however,  that  such  acquisition  or 
ownership  will  not  be  permitted  if  its  effect 
may  be  to  restrain  trade  or  substantially 
lessen  competition  within  the  United  States. 

Unfair  Competition  Prohibited 

Although  permitting  cooperation  and  associa- 
tion as  above  provided.  Section  4  of  the 
Act  expressly  states  that  the  prohibitions 
against  unfair  methods  of  competition  and 
the  remedies  provided  for  enforcing  such 
prohibitions  contained  in  the  Act  approved 
September  26,  1914,  creating  the  Federal 
Trade  Commission,  are  extended  to  unfair 
methods  of  competition  used  in  export  trade 

[35] 


against  competitors  engaged  in  export  trade, 
even  though  the  acts  constituting  such  unfair 
methods  are  done  without  the  territorial 
jurisdiction  of  the  United  States. 

Reports  to  Federal  Trade  Commission 

Associations  now  engaged  solely  in  export 
trade  are  required  to  file  with  the  Federal 
Trade  Commission,  within  sixty  days  after 
the  enactment  of  the  law,  a  verified,  written 
statement  setting  forth : 

(1)  The  location  of  its  oflSces  or  places  of 
business. 

(2)  The  names  and  addresses  of  all  its 
officers  and  of  all  its  stockholders  or  members. 

(3)  If  a  corporation,  a  copy  of  its  certificate 
or  articles  of  incorporation  and  by-laws. 

(4)  If  unincorporated,  a  copy  of  its  articles 
or  contract  of  association. 

Every  association  entered  into  after  the 
passage  of  the  law  is  required  to  file  a  similar 
statement  within  thirty  days  after  its  crea- 
tion. 

After  the  filing  of  the  first  statement  as 
above,  an  annual  statement  shall  be  filed  on 

[36] 


the  first  day  of  January  of ^each  year  showing 
the  location  of  its  offices  or  places  of  business 
and  the  names  and  addresses  of  all  its  officers 
and  of  all  its  stockholders  or  members,  show- 
ing all  amendments  to  and  changes  in  its 
articles  or  certificate  of  incorporation  or  in 
its  articles  or  contract  of  association.  Asso- 
ciations must  also  furnish  such  information 
as  the  commission  may  require  as  to  their 
organization,  business,  conduct,  practices, 
management,  and  relation  to  other  associa- 
tions, corporations,  partnerships,  and  in- 
dividuals. 

Failure  to  file  reports  as  above  required 
shall ,  prohibit  any  association  from  enjoying 
the  benefits  provided  by  the  law.  Such 
association  shall  also  forfeit  to  the  United 
States,  the  sum  of  $100.00  for  each  day  of  its 
continuance  of  such  failure,  which  forfeiture 
shall  be  recoverable  by  civil  suit  in  the  name 
of  the  United  States  under  the  direction  of 
the  Attorney-General  of  the  United  States. 

Investigation  by  Federal  Trade  Commission 

Whenever   the   Federal   Trade   Commission 
has  reason  to  believe 

[37] 


(1)  that  an  association  is  in  restraint  of 
trade  within  the  United  States  or  in  restraint 
of  the  export  trade  of  any  domestic  com- 
petitor of  such  association;  or 

(2)  that  an  association  either  in  the  United 
States  or  elsewhere  has  entered  into  any 
agreement,  understanding,  or  conspiracy  or 
done  any  act  which  artificially  or  intention- 
ally enhances  or  depresses  prices  within  the 
United  States  of  commodities  of  the  class 
exported  by  such  association,  or  which  sub- 
stantially lessens  competition  within  the 
United  States  or  otherwise  restrains  trade 
therein, 

it  is  authorized  to  summon  the  oflBcers  or 
agents  of  such  association  and  conduct  an 
investigation  into  the  alleged  violations  of 
the  law.  If  the  Commission  finds  that  the 
association  investigated  has  violated  the  law, 
it  may  make  recommendations  to  the  associa- 
tion for  the  readjustment  of  its  business  in 
order  that  it  may  thereafter  maintain  its 
organization  and  management,  and  conduct 
its  business  in  accordance  with  the  law.  If 
the   association   fails   to   comply    with    the 

[38] 


recommendations  made  by  the  Federal  Trade 
Commission,  such  recommendations  shall  be 
referred  to  the  Attorney-General  of  the 
United  States  for  such  action  thereon  as  he 
may  deem  proper. 

Enforcement  of  Law 

For  the  purpose  of  enforcing  the  provisions 
of  this  law,  the  Federal  Trade  Commission 
is  given  all  the  powers,  so  far  as  applicable, 
conferred  upon  it  by  the  Act  entitled  "An 
Act  to  create  a  Federal  Trade  Commission, 
to  define  its  powers  and  duties,  and  for  other 
purposes." 


SCHOOL  DF  8US1NLS3 
COLUiyiBIA  UNIVERSITY 


[39] 


Text  of  Webb  Law 


An  Act  to  promote  export  trade,  and  for 
other  purposes. 

Be  it  enacted  by  the  Senate  and  House  of 
Representatives  of  the  United  States  of  Amer- 
ica in  Congress  assembled,  That  the  words 
"  export  trade  "  wherever  used  in  this  Act  mean 
solely  trade  or  commerce  in  goods,  wares, 
or  merchandise  exported,  or  in  the  course  of 
being  exported  from  the  United  States  or 
any  Territory  thereof  to  any  foreign  nation; 
but  the  words  *' export  trade"  shall  not  be 
deemed  to  include  the  production,  manu- 
facture, or  selling  for  consumption  or  for  re- 
sale, within  the  United  States  or  any  Terri- 
tory thereof,  of  such  goods,  wares,  or  mer- 
chandise, or  any  act  in  the  course  of  such 
production,  manufacture,  or  selling  for  con- 
sumption or  resale. 

That  the  words  "trade  within  the  United 
States"  wherever  used  in  this  Act  mean 
trade  or  commerce  among  the  several  States 
or  in  any  Territory  of  the  United  States,  or 

[40] 


in  the  District  of  Columbia,  or  between  any 
such  Territory  and  another,  or  between  any 
such  Territory  or  Territories  and  any  State 
or  States  or  the  District  of  Columbia,  or 
between  the  District  of  Columbia  and  any 
State  or  States. 

That  the  word  "association"  wherever 
used  in  this  Act  means  any  corporation  or 
combination,  by  contract  or  otherwise,  of 
two  or  more  persons,  partnerships,  or  cor- 
porations. 

Sec.  2.  That  nothing  contained  in  the  Act 
entitled  "An  Act  to  protect  trade  and  com- 
merce against  unlawful  restraints  and  mon- 
opolies,"   approved    July    second,    eighteen 
hundred  and  ninety,  shall  be  construed  as 
declaring  to  be  illegal  an  association  entered 
into  for  the  sole  purpose  of  engaging  in  export 
trade  and  actually  engaged  solely  in  such 
export  trade,  or  an  agreement  made  or  act 
done  in  the  course  of  export  trade  by  such 
association,  provided  such  association,  agree- 
ment, or  act  is  not  in  restraint  of  trade  within 
the  United  States,  and  is  not  in  restraint  of 
the  export  trade  of  any  domestic  competitor 

[411 


of  such  association:  And  provided  further, 
That  such  association  does  not,  either  in  the 
United  States  or  elsewhere,  enter  into  any 
agreement,  understanding,  or  conspiracy,  or 
do  any  act  which  artificially  or  intentionally 
enhances  or  depresses  prices  within  the 
United  States  of  commodities  of  the  class 
exported  by  such  association  or  which  sub- 
stantially lessens  competition  within  the 
United  States  or  otherwise  restrains  trade 

therein. 

Sec.  3.  That  nothing  contained  in  section 
seven  of  the  Act  entitled  "An  Act  to  supple- 
ment existing  laws  against  unlawful  restraints 
and  monopolies,  and  for  other  purposes," 
approved  October  fifteenth,  nineteen  hundred 
and  fourteen,  shall  be  construed  to  forbid 
the  acquisition  or  ownership  by  any  corpo- 
ration of  the  whole  or  any  part  of  the  stock 
or  other  capital  of  any  corporation  organized 
solely  for  the  purpose  of  engaging  in  export 
trade,  and  actually  engaged  solely  in  such 
export  trade,  unless  the  effect  of  such  acquisi- 
tion or  ownership  may  be  to  restrain  trade 
or  substantially  lessen  competition  within  the 
United  States. 

[42] 


' 


Skc.  4.  That  the  prohibition  against  "un- 
fair methods  of  competition"  and  the  rem- 
edies provided  for  enforcing  said  prohibition 
contained  in  the  Act  entitled  "An  Act  to 
create  a  Federal  Trade  Commission,  to  define 
its  powers  and  duties,  and  for  other  pur- 
poses," approved  September  twenty-sixth, 
nineteen  hundred  and  fourteen,  shall  be  con- 
strued as  extending  to  unfair  methods  of 
competition  used  in  export  trade  against 
competitors  engaged  in  export  trade,  even 
though  the  acts  constituting  such  unfair 
methods  are  done  without  the  territorial 
jurisdiction  of  the  United  States. 

Sec.  5.  That  every  association  now  en- 
gaged solely  in  export  trade,  within  sixty 
days  after  the  passage  of  this  Act,  and  every 
association  entered  into  hereafter  which  en- 
gages solely  in  export  trade,  within  thirty 
days  after  its  creation,  shall  file  with  the 
Federal  Trade  Commission  a  verified  written 
statement  setting  forth  the  location  of  its 
oflSces  or  places  of  business,  and  the  names 
and  addresses  of  all  its  oflScers  and  of  all  its 
stockholders   or   members,  and  if  a  corpo- 

[43] 


ration,  a  copy  of  its  certificate  or  articles  of 
incorporation  and  by-laws,  and  if  unincor- 
porated, a  copy  of  its  articles  or  contract 
of  association,  and  on  the  first  day  of  Jan- 
uary of  each  year  thereafter  it  shall  make  a 
like  statement  of  the  location  of  its  oflBces  or 
places  of  business  and  the  names  and  ad- 
dresses of  all  its  oflBcers  and  of  all  its  stock- 
holders or  members  and  of  all  amendments 
to  and  changes  in  its  articles  or  certificate  of 
incorporation  or  in  its  articles  or  contract 
of  association.  It  shall  also  furnish  to  the 
commission  such  information  as  the  com- 
mission may  require  as  to  its  organization, 
business,  conduct,  practices,  management, 
and  relation  to  other  associations,  corpora- 
tions, partnerships,  and  individuals.  Any 
association  which  shall  fail  so  to  do  shall  not 
have  the  benefit  of  the  provisions  of  section 
two  and  section  three  of  this  Act,  and  it  shall 
also  forfeit  to  the  United  States  the  sum  of 
$100  for  each  and  every  day  of  the  con- 
tinuance of  such  failure,  which  forfeiture  shall 
be  payable  into  the  Treasury  of  the  United 
States,  and  shall  be  recoverable  in  a  civil 

[44] 


suit  in  the  name  of  the  United  States  brought 
in  the  district  where  the  association  has  its 
principal  oflSce,  or  in  any  district  in  which 
it  shall  do  business.  It  shall  be  the  duty  of 
the  various  district  attorneys,  under  the 
direction  of  the  Attorney-General  of  the 
United  States,  to  prosecute  for  the  recovery 
of  the  forfeiture.  The  costs  and  expenses  of 
such  prosecution  shall  be  paid  out  of  the 
appropriation  for  the  expenses  of  the  courts 
of  the  United  States. 

Whenever  the  Federal  Trade  Commission 
shall  have  reason  to  believe  that  an  associa- 
tion or  any  agreement  made  or  act  done  by 
such  association  is  in  restraint  of  trade  within 
the  United  States  or  in  restraint  of  the  export 
trade  of  any  domestic  competitor  of  such 
association,  or  that  an  association  either  in 
the  United  States  or  elsewhere  has  entered 
into  any  agreement,  understanding,  or  con- 
spiracy, or  done  any  act  which  artificially 
enhances  or  depresses  prices  within  the  United 
States  of  commodities  of  the  class  exported 
by  such  association  or  which  substantially 
lessens  competition  within  the  United  States 

[45] 


or  otherwise  lessens  trade  therein,  it  shall 
summon  such  association,  its  oflBcers,  and 
agents  to  appear  before  it,  and  thereafter 
conduct  an  investigation  into  the  alleged 
violations  of  law.  Upon  investigation,  if  it 
shall  conclude  that  the  law  has  been  violated, 
it  may  make  to  such  association  recommenda- 
tions for  the  readjustment  of  its  business,  in 
order  that  it  may  thereafter  maintain  its 
organization  and  management  and  conduct 
its  business  in  accordance  with  law.  If  such 
association  fails  to  comply  with  the  recom- 
mendations of  the  Federal  Trade  Commis- 
sion, said  commission  shall  refer  its  findings 
and  recommendations  to  the  Attorney-Gen- 
eral of  the  United  States  for  such  action 
thereon  as  he  may  deem  proper. 

For  the  purpose  of  enforcing  these  provi- 
sions the  Federal  Trade  Commission  shall 
have  all  the  powers,  so  far  as  applicable, 
given  it  in  *'An  Act  to  create  a  Federal  Trade 
Commission,  to  define  its  powers  and  duties, 
and  for  other  purposes.'' 

Approved  April  10,  1918. 

[46] 


COLUMBIA  UNIVERSITY   LIBRARIES 

This  book  is  due  on  the  date  indicated  below,  or  at  the 
expiration  of  a  definite  period  after  the  date  of  borrowing,  as 
provided  by  the  library  rules  or  by  special  arrangement  with 
the  Librarian  in  charge. 


DATE  BORROWED 


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